Federal Register: December 9, 2004 (Volume 69, Number 236)
DOCID: FR Doc 04-27025
FEDERAL ELECTION COMMISSION
Federal Election Commission
CFR Citation: 11 CFR Part 300
DOCUMENT ID: [Notice 2004-17]
NOTICE: PROPOSED RULES
ACTION: Bipartisan Campaign Reform Act; implementation:
DOCUMENT ACTION: Notice of proposed rulemaking.
SUBJECT CATEGORY:
Political Party Committees Donating Funds to Certain Tax-Exempt Organizations and Political Organizations
DATES: Comments must be received on or before January 10, 2005. If the Commission receives sufficient requests to testify, it may hold a hearing on these proposed rules. Commenters wishing to testify at the hearing must so indicate in their written or electronic comments.
DOCUMENT SUMMARY:
The Federal Election Commission requests comments on proposed amendments to its rules governing limitations on national, State, district, and local political party committees making or directing donations to certain taxexempt organizations and political organizations. These proposed rules would conform to the decision of the U.S. Supreme Court in McConnell v. FEC, which included a narrowing construction of section 101 of the Bipartisan Campaign Reform Act of 2002. The Commission has not made any final decisions on the issues presented in this rulemaking. Further information is provided in the SUPPLEMENTARY INFORMATION that follows.
SUMMARY:
Directing or donating non-Federal funds to tax-exempt organizations; national, State, district, and local political party committees prohibition,
SUPPLEMENTAL INFORMATION
The Bipartisan Campaign Reform Act of 2002, Public Law 107155, 116 Stat. 81 (Mar. 27, 2002) (``BCRA''), contained extensive and detailed amendments to the Federal Election Campaign Act of 1971 (``FECA'' or ``the Act''), as amended, 2 U.S.C. 431 et seq. The Supreme Court upheld most of BCRA in McConnell v. FEC, 540 U.S. 93, 124 S. Ct. 619 (2003). Under BCRA section 101(a), a national, State, district or local political party committee must not solicit any funds for, or make or direct donations to, certain taxexempt organizations. 2 U.S.C. 441i(d). Section 441i(d)'s restrictions apply to solicitations for, and making or directing donations to, two types of taxexempt organizations (``certain taxexempt organizations''). These consist of (1) organizations described in 26 U.S.C. 501(c) that are exempt from tax under 26 U.S.C. 501(a) (or that have submitted an application for determination of tax exempt status under section 501(a)) and that make expenditures or disbursements in connection with an election for Federal office (including expenditures or disbursements for Federal election activity); and (2) political organizations described in 26 U.S.C. 527 (other than a political committee, a State, district or local committee of a political party, or the authorized campaign committee of a candidate for State or local office).
In 2002, the Commission promulgated rules at 11 CFR 300.11, 300.37, 300.50, and 300.51 implementing 2 U.S.C. 441i(d). Explanation and Justification for Rules on Prohibited and Excessive Contributions: Non Federal Funds or Soft Money, 67 FR 49,064, 49,08949,091, and 49,105 49,106 (July 29, 2002). Except for the title of each, the final rule at 11 CFR 300.11 is identical to the final rule at 11 CFR 300.50, and the final rule at 11 CFR 300.37 is identical to the final rule at 11 CFR 300.51. Id. at 49,106.
Subsequently, the Supreme Court upheld 2 U.S.C. 441i(d)'s
prohibitions on the solicitation of funds for certain taxexempt
organizations. In a separate analysis, however, the Supreme Court
stated that 2 U.S.C. 441i(d) raises overbreadth concerns ``if read to
restrict donations from a party's federal accounti.e., funds that
have already been raised in compliance with FECA's source, amount and
disclosure limitations.'' McConnell, 124 S. Ct. at 680681. The Court
found ``no evidence that Congress was concerned about, much less that
it intended to prohibit, donations of money already fully regulated by
FECA * * * [t]hus, political parties remain free to make or direct
donations of money to any taxexempt organization that has otherwise
been raised in compliance with FECA.'' Id. at 681682. Accordingly, the
Commission now proposes to modify its regulations at 11 CFR 300.11,
300.37, 300.50 and 300.51 to provide that the prohibition on political
party committees \1\ making or directing donations to certain tax
exempt organizations is limited to donations of nonFederal funds and
thus would not apply to donations of Federal funds to these organizations.
\1\ These restrictions also apply to the national congressional
campaign committees and to ``an entity that is directly or
indirectly established, financed, maintained, or controlled by any
such national, State, district, or local committee or its agent, and
an officer or agent acting on behalf of any such party committee or
entity * * *'' and references to political party committees in this
Notice of Proposed Rulemaking also include these entities, agents
and officers. See 2 U.S.C. 441i(d); 11 CFR 300.11(b), 300.37(b),
300.50(b), and 300.51(b); see also Advisory Opinion 200425
(concluding that the chairman of a national congressional campaign
committee, under the facts presented, was acting in his personal
capacity and not as an officer or agent of a national congressional
campaign committee when donating his personal funds to organizations engaged in voter registration activity).
[[Page 71389]]
I. Proposed 11 CFR 300.11Prohibitions on Fundraising For And Donating To Certain TaxExempt Organizations
The Commission proposes to revise 11 CFR 300.11 by modifying the prohibition in current section 300.11 on national party committees, making or directing any donations to certain taxexempt organizations. As modified, section 300.11 would prohibit the making or directing of donations of nonFederal funds to these organizations. Section 300.2(k) defines ``nonFederal funds'' as funds that are not subject to the limitations and prohibitions of the Act. 11 CFR 300.2(k).
As revised, section 300.11 would be consistent with 2 U.S.C. 441i(a)(1) and 11 CFR 300.10, under which national party committees may not solicit, receive, or direct to another person a contribution, donation or transfer of funds or any other thing of value, or spend any funds, not subject to the amount limitations, source prohibitions and reporting requirements of the Act, because national party committees are barred from accepting nonFederal funds.
Although only national party committees are the subject of the
prohibitions in section 300.11, current paragraph 300.11(b)(3)
erroneously expands the scope of these restrictions to include ``an
agent of a national, State, district, or local party committee of a
political party'' [emphasis added]. Accordingly, the Commission also
proposes to make a technical correction to paragraph 300.11(b)(3) which
would strike the reference to a State, district, or local party committee.
II. Proposed 11 CFR 300.37Prohibitions on Fundraising For And Donating To Certain TaxExempt Organizations
The Commission proposes revisions to 11 CFR 300.37, which applies to State, district and local party committees, that are similar to the proposed revisions to 11 CFR 300.11 discussed above. Under the draft amendments, a State, district, or local committee of a political party would be prohibited from soliciting any funds for, or making or directing any donations of nonFederal funds to, certain taxexempt organizations.
The Commission invites comment on whether the Supreme Court's
rationale for limiting section 441i(d)'s prohibition on directing or
donating nonFederal funds applies to Levin funds. See McConnell, 124
S. Ct. at 680682. Levin funds are funds that a State, district or
local party committee of a political party raises itself pursuant to
State law, and are limited to $10,000 per calendar year from any person
other than foreign nationals and those prohibited from making a
donation under State law. 2 U.S.C. 441i(b)(2)(A)(ii); 11 CFR 300.2(h)
and (i). A State, district or local committee of a political party may
spend Levin funds on ``[a]ny use that is lawful under the laws of the
State in which the committee is organized'' other than two types of
Federal election activities: (1) Public communications that promote,
support, attack or oppose a Federal candidate and (2) services provided
by certain party committee employees. 11 CFR 300.32(b)(2). The donation
of Levin funds is subject to amount limitations, certain source
prohibitions, and reporting requirements under the FECA, even though
these amount limitations, source prohibitions and reporting
requirements are different than those applicable to Federal funds. See,
e.g., 11 CFR 300.31(c) and (d) and 300.36(b). Thus, Levin funds may
fall within the Supreme Court's description of funds ``already fully
regulated by FECA,'' and ``otherwise * * * raised in compliance with
FECA'' that are outside the Court's narrow construction of the
prohibition in 2 U.S.C. 441i(d). However, the Commission has stated
that Levin funds are a ``new type of nonFederal funds'' and are
``unlike Federal funds, which are fully subject to the Act's
requirements, and unlike ordinary nonFederal funds because they are
subject to certain additional requirements under BCRA.'' Explanation
and Justification to Final Rules; Prohibited and Excessive
Contributions: NonFederal Funds or Soft Money, 67 FR 49,064, 49,065,
and 49,085 (July 29, 2002). The Commission invites comments on whether
State, district and local political party committees should be allowed
to make or direct donations of Levin funds to certain taxexempt organizations to the extent permitted by State law.
III. Proposed 11 CFR 300.50Prohibited Fundraising by National Party Committees
For the reasons addressed above in the discussion of proposed section 300.11, the Commission proposes to revise 11 CFR 300.50 by modifying the prohibition in current section 300.50 on national party committees making or directing any donations to certain taxexempt organizations. As modified, section 300.50 would prohibit national party committees from soliciting any funds for, or making or directing donations of nonFederal funds to, certain taxexempt organizations.
The Commission also proposes to make a technical correction to 11
CFR 300.50(b)(3) that is similar to the proposed technical change to 11 CFR 300.11(b)(3) discussed above.
IV. Proposed 11 CFR 300.51Prohibited Fundraising by State, District, or Local Party Committees
For the reasons addressed above in the discussion of proposed sections 300.11 and 300.37, the Commission proposes to revise 11 CFR 300.51 to provide a State, district, or local committee of a political party is prohibited from soliciting any funds for, or making or directing any donations of nonFederal funds to, certain taxexempt organizations.
For the reasons addressed in the discussion of proposed section
300.37, the Commission invites comment on whether or not Levin funds should be subject to the section 300.51 prohibition.
Certification of No Effect Pursuant to 5 U.S.C. 605(b) (Regulatory Flexibility Act)
The Commission certifies that the attached proposed rules, if promulgated, would not have a significant economic impact on a substantial number of small entities. The basis for this certification is that the national, State, district and local party committees of the two major political parties are not small entities under 5 U.S.C. 601, and the number of other small entities to which the rules would apply is not substantial. Moreover, the proposed rules narrow the scope of certain restrictions applicable to the affected political party committees, and thus would not have a significant economic impact on the affected entities.
List of Subjects in 11 CFR Part 300
Campaign funds, Nonprofit organizations, Political committees and parties.
For the reasons set out in the preamble, the Federal Election
Commission proposes to amend subchapter C of chapter I of title 11 of the Code of Federal Regulations as follows:
PART 300NONFEDERAL FUNDS
1. The authority citation for Part 300 would continue to read as follows:
Authority: 2 U.S.C. 434(e), 438(a)(8), 441a(a), 441i, 453.
2. In Sec. 300.11, the introductory text of paragraph (a) and paragraph (b)(3) would be revised to read as follows:
[[Page 71390]]
Sec. 300.11 Prohibitions on fundraising for and donating to certain taxexempt organizations (2 U.S.C. 441i(d)).
(a) Prohibitions. A national committee of a political party,
including a national congressional campaign committee, must not solicit
any funds for, or make or direct any donations of nonFederal funds to, the following organizations:
* * * * *
(b) * * *
(3) An entity that is directly or indirectly established, financed,
maintained or controlled by an agent of a national committee of a
political party, including a national congressional campaign committee. * * * * *
3. In Sec. 300.37, the introductory text of paragraph (a) would be revised to read as follows:
Sec. 300.37 Prohibitions on fundraising for and donating to certain taxexempt organizations (2 U.S.C. 441i(d)).
(a) Prohibitions. A State, district or local committee of a
political party must not solicit any funds for, or make or direct any donations of nonFederal funds to:
* * * * *
4. In Sec. 300.50, the introductory text of paragraph (a) and paragraph (b)(3) would be revised to read as follows:
Sec. 300.50 Prohibited fundraising by national party committees (2 U.S.C. 441i(d)).
(a) Prohibitions on fundraising and donations. A national committee
of a political party, including a national congressional campaign
committee, must not solicit any funds for, or make or direct donations of nonFederal funds to the following organizations:
* * * * *
(b) * * *
(3) An entity that is directly or indirectly established, financed,
maintained or controlled by an agent of a national committee of a
political party, including a national congressional campaign committee. * * * * *
5. In Sec. 300.51, the introductory text of paragraph (a) would be revised to read as follows:
Sec. 300.51 Prohibited fundraising by State, district, or local party committees (2 U.S.C. 441i(d)).
(a) Prohibitions. A State, district or local committee of a
political party must not solicit any funds for, or make or direct any donations of nonFederal funds to:
* * * * *
Dated: December 3, 2004.
Ellen L. Weintraub,
ViceChair, Federal Election Commission.
[FR Doc. 0427025 Filed 12804; 8:45 am]
BILLING CODE 671501P
FOR FURTHER INFORMATION CONTACT
Ms. Mai T. Dinh, Assistant General Counsel, or Mr. Albert J. Kiss, Attorney, 999 E Street, NW., Washington, DC 20463, (202) 6941650 or (800) 4249530.